All posts tagged Rolls-Royce

Rolls-Royce Holdings Thursday said it was confident that Boeing Co. would fix problems with its 787 Dreamliner jets, which are grounded worldwide, as the Chicago plane maker works to identify the cause of battery problems on the aircraft.

Rolls-Royce makes engines for Boeing’s 787s, but said the issues being investigated had not had any impact on business.

John Rishton, the British company’s chief executive, said Boeing was an “excellent company” and he’s confident it’ll resolve the battery problems.

“We continue to work on production of the Trent 1000 engines used in the 787 Dreamliner and do not anticipate any problems–we are confident that Boeing will fix it,” Mr. Rishton said.

Rolls-Royce’s optimism comes as Boeing has failed to replicate, or identify the cause of, the battery malfunctions that grounded the jet, either in test flights to date or in intensive work on the ground. The company is working on interim fixes which have sparked heightened discussions between Boeing and the Federal Aviation Administration as both sides see the likely timetable for various longer-term solutions stretching out.

The U.K. engine maker’s comments on Boeing, one of its biggest customers, came as it reported a sharp rise in full-year earnings, raised its dividend by 11%, but said it expects only modest growth in 2013.

Corporate news Tuesday is dominated by the arrest of Finmeccanica’s chief executive Giuseppe Orsi and Barclays’ new strategy plan, laid out by CEO Antony Jenkins.

Away from the excitement around these stocks Exane BNP Paribas has expanded its oil equipment and services coverage by adding U.K. engineering companies to its roster. Its analysts have initiated coverage of John Wood Group, Petrofac and AMEC, while Subsea 7 is upgraded and Seadrill is downgraded.

Exane thinks the market has over-reacted to news surrounding Saipem’s profit warning at the end of January which opens up “selective opportunities for investors.” Exane said the oil industry’s capital expenditure growth is decelerating somewhat but that the sector is still conducive for sustained medium-term top-line growth in oil services. On the profitability side, Exane sees market concerns starting to dissipate in the forthcoming results season as the sector should be able to sustain current margins.

JPMorgan Cazenove has initiated coverage of stocks in the defense and aerospace industry.

Jaguar Land Rover’s stellar results highlight what’s best about the U.K. auto industry but also underscore how important it is for the U.K. to keep premium car manufacturers such as Jaguar Land Rover and BMW investing in this country rather than taking their business elsewhere.

The premium sector which includes Bentley, Aston Martin and Rolls Royce as well as JLR and BMW has grown significantly driven by export demand from brand conscious buyers in emerging markets. For example, 92% of Rolls Royce and 83% of JLR’s production went overseas while BMW exported 81% of its Minis, according to data from the Society of Motor Manufacturers and Traders.

All these manufacturers are in foreign ownership but continue to invest in facilities here – £6 billion ($9.6 billion) over the past year alone – drawn by a relatively flexible labor market, investor-friendly tax regime and reservoir of engineering skills, which is key to the production of an ever-increasing number of premium models.

Tata Motors’s Jaguar Land Rover posted net profit of 305 million pounds ($487.67 million), an increase of 77% from a year earlier, for the second-quarter. This included a 29% increase in retail sales.

“Jaguar Land Rover will continue to invest in its products, plants and will drive further growth by spending in the region of £2 billion across the financial year,” CEO Dr. Ralf Speth said.

And rightly so. First, it gains £1.5 billion in cash for selling its 32.5% share in IAE to Pratt. Secondly, Rolls-Royce will over the next 15 years receive further payment for each hour flown by aircraft powered by V2500 engines, which are made by IAE.

The failure of one of its engines on a high-profile Airbus A380 super-jumbo jet last Thursday was a huge embarrassment for this bastion of British industry and a major exporter. A second issue a day later involving a different type of engine on a Boeing (BA) 747 aircraft possibly would have gone unnoticed but for the first incident.

Together, the two problems have inflicted serious damage to Rolls-Royce’s image. In each case, the plane concerned was operated by Australian carrier Qantas, which has been quick to ground its A380 fleet and point the finger of blame at Rolls-Royce.

Rolls-Royce is changing its chief executive, but its strategy will likely remain the same. Read our news story here.

In choosing John Rishton, the CEO of Dutch food retailer Ahold to succeed John Rose, its long serving and highly regarded CEO, the FTSE 100 company has opted for an existing board member with aerospace industry experience rather than an outsider.

The board gets an executive it is comfortable with, and one that knows the company and how it works. Analysts don’t expect any change in strategy when Rishton takes the reigns next year, and senior management will likely remain in place.

Essentially, Rishton, who previously served as chief financial officer at British Airways and held senior positions at Ford Motor Co., is a solid executive with top-notch experience who will be a safe pair of hands at Rolls-Royce.